11.29.11

American Airlines Chapter 11 Filing Won’t Jeopardize Service

Just because American Airlines filed for Chapter 11 bankruptcy protection, it doesn’t mean your frequent-flier miles are in jeopardy, or those holiday trip reservations.

If you haven't yet heard, American Airlines filed for Chapter 11 bankruptcy protection earlier today. Frequent travelers—myself included—immediately thought of their frequent-flier miles. Should you jump on a flight to Antigua to burn them?

The answer to that question is no, says Anne Banas, the executive editor of Smarter Travel.com. In fact, your miles—and any upcoming flights—aren't likely to be affected at all. "Because this is Chapter 11 instead of Chapter 7, American Airlines will pretty much operate as normal."

History tells us she's probably right. US Airways, Delta, Continental, and United have all gone through Chapter 11 bankruptcy. They—and their customers—have come out relatively unscathed. In fact, the most surprising thing about American's filing may be that they held on so long. "What feels different here is that it's so much later than all the other airlines. American Airlines really held out, and because of that, they wound up with higher labor costs than all of the other airlines," says Banas.

So what might happen next? Andrea Huguely, a spokeswoman for the company, says not much where customers are concerned. "Our customers can continue to depend on us for their travel needs. We will continue to fly our regular schedules, and there are no immediate changes to our service or schedules as a result of the Chapter 11 filing. Tickets will be honored, reservations are fully intact, and our policies regarding exchanges and refunds remain the same. We also expect to maintain our AAdvantage program and expect to ensure that all miles and elite statuses earned by members remain secure and intact."

There may be good news coming out of this bankruptcy, at least for consumers: be on the lookout for deals.

In the long term, says Banas, the airline could merge with another, a precedent that's already been set by United and Continental, Delta and Northwest, and Southwest and AirTran, among others. "Usually what happens if you merge, the two airlines will merge their frequent-flier programs, and in a lot of cases—as with United and Continental—their programs are very similar, with similar fee structures, so it's kind of seamless. Other times they might have to come up with a new system changing what each mileage credit is worth. But remember that these are their most loyal customers, and so they generally find a way to make it work. It's certainly not a situation where people lose their miles."

If you're concerned about your holiday travel, sign up for email or text alerts about your flight. This is good practice anyway, particularly this time of year, when congestion and bad weather can lead to delays and canceled flights. And there may be good news coming out of this bankruptcy, at least for consumers: Banas says to be on the lookout for deals. If the company finds that people are not booking flights because they're wary of the bankruptcy, they may start trimming fares.

With Arielle O'Shea